2014 is the first year that there could be a penalty for individuals that didn’t have coverage for 3 consecutive months or more during the year. While 2014 is already behind us, it’s important to understand the penalty as you prepare to file your taxes. In addition, open enrollment for 2015 coverage extends until February 15 – that means there’s still time to get coverage in 2015 and avoid paying a penalty for 2015.
How does the penalty work? The penalty is designed to phase in over time and encourage individuals to have coverage either through their employer or an individual policy.
- 2014 – the penalty is $95 or 1% of your income, whichever is higher.
- 2015 – the penalty is $325 or 2% of your income, whichever is higher.
- 2016 – the penalty is $695 or 2.5% of your income, whichever is higher.
- After 2016 – the penalty is indexed to inflation
Determining the penalty that’s applicable to you can be complicated. Webb Insurance does not offer tax advice – this blog is not tax advice. We encourage you to talk with your tax adviser about your specific situation. If you’d like to talk about insurance, that’s where we come in. Give us a call at 800-303-6329 or drop us an email.